Have you ever logged into your ads account and seen the red indicator “Limited by Budget” on your campaigns? You might think Google or Microsoft just want you to spend more, but the reality is more complex than that. First, let’s look at what it means when campaigns are “Limited by Budget.” Then, we’ll discuss what this says about your ad campaigns and how to approach raising your budgets.
What Does “Limited by Budget” Mean?
In the simplest terms, “Limited by Budget” means that your daily budget is set too low to capture all the potential traffic for your ads. Google and Microsoft will try to stretch your budget across the entire day, but this often means your ads won’t be shown every time they could be, and, if your budget is exhausted before the end of the day, your ads will stop showing until the next day.
Put another way, a limited budget means that there are opportunities for clicks and impressions that you’re missing out on. Limiting the impressions can lead to less overall traffic to your site, fewer conversions, and missed opportunities for increased revenue. In addition, if your ads are not consistently shown due to budget constraints, your campaign’s performance metrics may suffer. This includes lower impression share, reduced click-through rates, and potentially higher costs per click (CPC) because you’re not maximizing your ad exposure.
Indicators of Success
The good news is that being “Limited by Budget” does not typically indicate that your campaigns are lacking in strategy or limited by ideas. In fact, these campaigns are often optimally designed and highly successful in several key ways:
- High Demand and Engagement: There is high demand for the ads, and they are engaging enough to attract clicks and impressions. The targeting, ad copy, and creative elements are effectively reaching and resonating with the audience.
- Optimized for Performance: A campaign that reaches its budget limit quickly is often optimized for performance. This means the ads are being shown to the right audience at the right time, generating interest and interaction.
- Indicator of Potential: Reaching the budget limit regularly shows the campaign’s potential to perform even better with a higher budget. It provides clear evidence that with more investment, the campaign could capture more traffic and potentially generate more conversions.
- Positive ROI: Successful campaigns that are budget-limited often have a good return on investment (ROI). The high level of engagement and interaction typically translates into valuable actions, such as sales or leads, demonstrating the campaign’s effectiveness.
- Data-Driven Insights: Budget limitations highlight areas where additional investment could yield significant results. Analyzing the performance data of these campaigns can provide insights into which aspects are most effective and worth scaling up.
The bottom line is that while creative, strategic ideas are crucial for successful campaigns, “Limited by Budget” is a technical constraint, not a creative or strategic limitation, that directly restricts ad visibility and performance, especially when using smart bidding. To reiterate, “Limited by Budget” can indicate that your campaigns may already be very successful due to strategic optimization, creative and effective messaging, and application of the latest and greatest best practices.
Strategic Budget Increases
When your campaigns are marked as “Limited by Budget,” it’s essential to apply additional funds strategically to maximize returns. Most importantly, you should focus on high-performing campaigns. These campaigns have already been proven to deliver good results, so additional investment is likely to yield even better outcomes.
Once you’ve identified a campaign to add additional budget to, first analyze its performance data to understand which ads, keywords, and products are delivering the best results. Focus on metrics like conversion rate, return on ad spend (ROAS), cost per conversion, click-through rate (CTR), and impression share.
Raise the budget gradually rather than making a significant jump all at once. This allows you to monitor the impact of the increase and make adjustments as needed. For instance, you might start with a 10 to 20% increase and then evaluate performance after a week or two. This might mean that you take the provided budget recommendations with a grain of salt: rather than doubling or tripling your budget, set one that is enough of an increase to provide the data you’ll need to decide if more budget will continue to drive results. That also prevents Google or Microsoft from trying to cast the net too wide too quickly – the algorithms have to do a better job of still meeting the campaign goals.
Continue to Monitor Your Campaigns & Make Adjustments
It’s crucial to continuously monitor the performance of your campaigns after increasing the budget. Look for any changes in key metrics and adjust your strategy accordingly. This might involve reallocating budget between campaigns, pausing underperforming ads, or further optimizing high-performing ones.
If your campaign remains “Limited by Budget” even after you have increased the budget, it means that there is still more traffic and potential conversions that you could capture with additional budget. Consider increasing the budget again in 10 to 20% increments and monitoring the results.
At the end of the day, seeing the “Limited by Budget” indicator in your ads account is not just a prompt to spend more; it’s an important signal about the performance and potential of your campaigns. This status highlights that your campaigns are effectively reaching and engaging your target audience but are constrained by the allocated budget. By strategically increasing your budget, you can unlock more opportunities for clicks, impressions, and potentially conversions, leading to higher overall performance and ROI.
Approaching budget increases methodically, focusing on high-performing campaigns, and continuously monitoring key metrics will ensure that your additional investment is well-spent and yields the best possible results. Remember, being “Limited by Budget” is a sign of success and potential, indicating that with the right adjustments and increased investment, your campaigns can achieve even greater success.
